Russia’s Protest Armageddon Averted

The barrage of mass protest fired in Russia’s far east ten days ago echoed with a whimper as opponents of the import car tax hike staged actions across Russia. Today’s protests lacked the manpower of the previous ones, and in Vladivostok, the epicenter of the movement, OMON easily dispersed a crowd of around a 500 people. Police detained about 30100 people among them included protesters, onlookers, journalists, and broadcast footage by REN-TV’s Valentina Troshina. Here’s a BBC video of the zachistka.

The columns of cars which were so successful in paralyzing Vladivostok ten days go also had limited success. One column of around 40 cars were able to make it to the center of town where the honked their horns. Another column of about 30 cars jammed Magnitagorsk street, while a third of about 30 cars waved flags as they circled the town center. No mass traffic disruption seemed to materialize.

In addition to Vladivostok, sparsely attended protests occurred throughout the country. Actions in South Sakhalin, Barnaul, Blagoveshchensk, Tomsk, Kemerovo, and Khabarovsk were without incident. Police reported that about 25 people (another source says 150) gathered in legal protests in Moscow and St. Petersburg, a number that was completely overshadowed by the 1,500 police and 600 GUVD officers mobilized to contain the actions. About 300 people gathered on Lenin Square in Novosibirsk without incident.

The Vladivostok protests were called hastily, poorly organized and mired in confusion. According to RIA Novosti, the call for today’s protests came from car enthusiast websites. Auto organizations said that they never called for a protest and weren’t going to participate in it. In fact, Dmitrii Penyaz, the leader of the Society for the Defense of Drivers and provincial Duma rep, urged his supporters to not participate in Sunday’s illegal action claiming that they were the work of opportunists. “Now we clearly see the jobbery of our problem among you–unknown provocateurs encourage mass disorder for the purpose of not solving our painful problems, but for the destabilization of the situation in the region.”

It does appear that opposition parties of all stripes are jumping on the tax protest bandwagon. For example, in Kaliningrad, the local branches of the KPRF, Patriots of Russia, the Left Front, and the National Bolsheviks used the car protests to agitate against corruption, high fuel costs, and public services. Most of the protesters, however, carried signs and slogans about the car tax. On Friday, the newly constituted “opposition” force, Solidarity, gave their support to the car tax protesters. In a statement published in Ezhednevnyi zhurnal, they said the tax hike was Putin’s effort to “protect oligarchs close to him, the owners of automakers S. Chemezov (AvtoVaz) and O. Deripaska (AvtoGaz). Such actions have no use except to raise the price of cars and preserve the remaining Russian auto industry. In fact, in choosing between the 20 million motorists and the oligarchs, Putin chose the latter.” The statement went on to call for officials to drive domestic made cars.

One possible reason for Sunday’s low turnout is that Putin made a preemptive strike. Putin’s move: economic nationalism to feed protestors’ economism. First, he called on the social sector, police and rescue services to buy domestic cars, saying the government would allocate $450 million to fund. He encouraged state owned companies and large private companies to do the same. In addition, Russia’s state investment bank is considering giving Russia’s “Big Three” a total of $616 million in loans to help prop up the industry. Lastly, Putin suggested that next year the government would begin to subsidize loans for individuals to buy domestic cars under $12,500 or less. Whether this will change Russians’ preference for foreign cars is unknown, and probably unlikely.

This is all nice, but wholly ineffective in the long term. Especially since Russia is now intimately tied to global capitalism. The current economic crisis has shown that while capital remains uneven, it shockwaves bat all nation’s shores. Remember VVP, as Marx famously wrote, capital batters all “Chinese walls.” You might as well recognize that Russia’s walls are in the dead center of capital’s cannonade.

Pietro Shakarian, graduate student at the Center for Russian, East European, and Eurasian Studies at the University of Michigan. He has written widely on Russia and the former Soviet space and maintains his own blog Reconsidering Russia and the Former Soviet Union. He is the editor of The Red Flag at Ararat by Aghavnie Yeghenian and two forthcoming republications Transcaucasia (1854) by Baron August von Haxthausen and Journey to Ararat (1846) by Friedrich Parrot.

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“Bastards! (сволочи!)” For the last week a women who sits in front of me in the reading room has been cursing documents as she thumbed through files of Komsomol protocols and resolutions from the late 1980s. I finally found out what she is working on the other day.

“They are all thieves,” she told me yesterday during tea. “They stole from me and Russia. During Komsomol meetings they were diving up the property of cooperatives, allocating money for projects and themselves.” The “they” are Russia’s oligarchs, many of which have fled the country as exiles. “Khodorkovsky’s name is everywhere,” she told me pointing to a document from 1991 that details funds going to one of the oil cooperatives and banks he “owned.” The protocol in the document allocated to him over a million dollars.

“You know,” I told her “many in the United States consider people like Khodorkovsky are considered heroes of democracy.” “Well, here they are all thieves.” And it was no wonder, she added, because Khodorkovsky was tied to American banks in the early 1990s.

This woman is working on an article she hopes to publish in Der Spiegel. The story of how leading cadres in the Komsomol allocated property to themselves is a fascinating story. It is a perfect picture of what might call primitive capitalist accumulation with all the theft, swindle and blood that goes with it. Everybody knows how elites the Communist Party, like Gazprom’s Viktor Chernomyrdin became instant billionaires. What is less known is how Communist Youth League cooperatives were used in the 1980s as a means to marketize the Soviet economy.

Gorbachev’s idea was good natured but na?ve. By rehabilitating the ideas of Nikolai Bukharin, Gorbachev hoped to revitalize the executed Bolshevik’s slogan “Enrich Yourselves!” and his ideas about socialist competition. Like in the 1920s, Komsomol cooperatives of the 1980s were subjected to market principles to foster competition with state enterprises. The competition, it was believed, would increase productivity and production quality. It is now called Komsomol capitalism.

Komsomol cooperatives were based in two industries: construction and technology. But archival documents might reveal a much wider breath of entrepreneurship. From the few documents, I was shown, the Komsomol was allocating funds to oil, banking, and publishing, all of which were run and later owned by key Komsomol cadres. This of course wasn’t Gorbachev’s idea. His idea was that using the Komsomol to experiment with market reforms was politically safe. The Party pumped funds into the organization for it to set up cooperatives. In the case of technology, it was hard currency since Komsomol members would buy old computer equipment from the West and refurbish it for big profits.

By the time the Soviet system collapsed, the now redundant Komsomol was awash with cash. The players in the organization quickly appropriated it and set up the first banks, and therefore were the first ones that had the ability to give credit. The Komsomol oligarchs also made out big in the privatization scandals of the 1990s where they took privatization shares for loans. The result was that many, like Khodorkovsky, became the owners of recently privatized state enterprises.

“I’ll take these documents to court if I have to,” the woman told me with hopes that an article based on archival documents will bring some justice. In fact, some of the documents she’s looking at were used in Khodorkovsky’s conviction. “The strange thing is that he didn’t believe he was guilty. This is why he didn’t flee to Israel or America like the others. But how could he think he was innocent!? His name is all over these documents. And there were laws on cooperatives that prevented their privatization. And the Komsomol was after all a social organization and therefore not theirs to take.”

Lancet is back in the media limelight with its recent study “Mass privatisation and the post-communist mortality crisis: a cross-national analysis.” The study’s authors, Prof. David Stuckler, Dr. Lawrence Kind, and Prof. Martin McKee, commit the sin of all sins by arguing that “Rapid mass privatization as an economic transition strategy was a crucial determinant of differences in adult mortality trends in post-communist countries; the effect of privatization was reduced if social capital was high.” Namely, that the “shock therapy” of the mid-1990s led to 3 million premature deaths in Eastern Europe and the former Soviet Union. In Russia in particular rapid privatization was a continuing factor to the five year drop in life expectancy between 1991 and 1994, resulting in an estimated 1 million premature deaths.

Defenders of rapid privatization have jumped all over the authors’ findings. In a letter to the Financial Times, Jeffery Sachs, the stanchest apologist for “shock therapy,” called the study a “confused polemic” and that his policies had “no discernible adverse effect in these countries on life expectancy. If anything, its effects were positive.” The study cited one article by Sachs and for some reason he took this as its authors taking him to task personally. Methinks the ideologue doth protest too much.

The Economistblamed everything but shock therapy for any rising mortality rates. They condemned Lenin and Stalin for creating the planned economy (If the Economist really wants “the blame game to start at the beginning” why not begin with Ivan Grozny for establishing serfdom), Brezhnev’s geriatric auto-piloting for failing to start reforms, Gorbachev for “running printing presses red-hot,” the all-time favorites of “poor diet, smoking and, especially, drinking,” and the West’s failure to prepare for the Soviet collapse. Basically everything butprivatization is given a accusatory nod. Apparently admitting that privatization had any adverse effect would be like questioning the existence God himself. In the end, the editorial concludes “correlation is not causation.” Maybe, but correlation certainly doesn’t help.

First, [Sachs] conjectures that rapid mass privatisation “probably played zero role” and that “a rapid transition … had no discernible adverse effect”. We provide robust evidence that rapid privatisation increased unemployment, reduced access to healthcare, formerly provided by state-owned companies, and depleted the state budget for social safety nets.

Second, Prof Sachs seems unaware of the causes of the post-Soviet mortality crisis. He argues that Russia’s devastating mortality surge in the 1990s resulted from diets high in saturated fats and red meat, dating back to the 1960s. While poor diets are a factor in the underlying death rate, they cannot plausibly explain the massive fluctuations that occurred at this time. Instead, there is a wealth of evidence that these additional deaths were substantially due to changes in hazardous drinking.

In retrospect I think “shock therapy” was a disastrous economic policy. It was ideology trumping good economic analysis. The comparison between the successes in China and the failures of Russia tell a clear story of how bad “shock therapy” was.

The defenders [of shock therapy] say things like, “We were worried that if we didn’t engage in rapid change, there could be reversals.” The critics of that view said: “If you proceed in this reckless way it will result in alienation, failure and reversals.”

It was a matter of judgment, of course. We hadn’t gone through these experiments. But there were other historical experiments on which we could base judgments. None were identical. More reversals occurred in the shock therapy countries, whereas the countries that proceeded in a more careful way have typically moved to reinforce a more democratic direction.

This last sentence is worth thinking about. Not only did privatization contributed to increased mortality, the political fallout from this disastrous policy might had led to Russia’s authoritarian backlash. Interesting.